Why Chemours shares fell this week

What happened

While the general gloom in the market is driving the S&P500 headed for a drop of more than 5% this week, investors are mostly pessimistic about Chemours (CC -5.33%). As of 2:05 p.m. ET, shares of Chemours are down 20.7% since the market closed last Friday, according to data from S&P Global Market Intelligence.

In addition to overall concerns about the economy, investors overwhelmingly clicked the sell button on Chemours shares after the company lowered its adjusted earnings before interest, tax, depreciation and amortization (EBITDA) forecast on Wednesday. for 2022. Some bearish attention from Wall Street, meanwhile, has been a further catalyst for the titanium stock’s decline.

So what

In a press release discussing its outlook for 2022, Chemours said it expects a less profitable year than it had originally expected. In its second quarter 2022 results presentation, management had forecast adjusted EBITDA of $1.475 billion to $1.575 billion for 2022. Now, however, the company expects to generate adjusted EBITDA of $1.4 billion. dollars to $1.45 billion, down 7% in the middle of the ranges. While the bottom line may not be as strong as management initially expected, the midpoint of the new guidance is a 9% increase over what the company reported in 2021.

In response to the company’s business update, several analysts have revised their price targets on Chemours shares.

  • RBC Capital analyst Arun Viswanathan lowered the price target to $35 from $48.
  • Matthew DeYoe at Bank of America reduced the price target to $36 from $44.
  • BMO cut its price target to $46 from $55.

Now what

It’s no surprise that analysts have turned bearish on Chemours shares, with management forecasting a less profitable 2022. It’s unclear what time frame analysts are basing their price targets on. Often, Wall Street has shorter investment horizons than the three to five year minimum holding periods favored by long-term investors. As a result, investors interested in a top titanium stock like Chemours can pick it up at a discount with shares now valued at just 4.7 times forward earnings.

Scott Levin has no position in the stocks mentioned. The Motley Fool has no position in the stocks mentioned. The Motley Fool has a disclosure policy.

Comments are closed.